Moral Hazard at Ex Im Bank.

Economics is supposed to be "value-neutral."  But the value-neutral school is the only one that has a term called "moral hazard."  Richard Cameron takes down ExIm Bank nonsense:

Contrary to the standard story that paints the Ex-Im Bank as in the business of supporting small businesses, numbers show that despite a greater number of small businesses working with the bank recently, the bulk of the money goes to just 10 large corporations.
Most firms in need of underwriting get it from the private market. This raises questions not only about the miniscule percentage of government backed funding, but the reasons behind why only 2 percent of businesses opt for Ex-Im financing when the majority of businesses don’t.
The picture that emerges of the 2-percent cadre enjoying Ex-Im leverage is of a handful of politically well connected multi-national corporations whose operations abroad favor public underwriting, like Bechtel, the fourth largest private corporation in America, and Lockheed Martin, with $50 billion in assets. Fact: Thirty percent of Ex-Im Bank’s lending was to one large corporation: Boeing.

Read on for examples of how ExIm Bank punishes picked losers to help picked winners.

 Feel free to forward this by email to three of your friends.

Bookmark this post --- Email this post